Plan for your Life, NOT your Retirement

Over the next ten years, it’s estimated that 70% of businesses currently in operation will go through a transition or sale.

In any transition, there are the usual considerations that must be taken into account; such as the type of sale, tax consequences, price, working with employees and key management. Legal and financial experts are willing and able to help in this process. It’s imperative and planning can never start too early. Something that is often overlooked and is crucial to a successful transition is the emotional well-being of the seller.

Well-being is implicitly tied to finding purpose in your life after the sale.  Hint: golf and the beach may be satisfying for a few months, but will soon give rise to a hard case of Sudden Retirement Syndrome (SRR). Somehow the hardwiring in humans has a hard time with a clean break. There is some innate requirement to struggle against the world. Trust me, one of the worst years of my life was senior year of college, where somehow I imagined fewer classes and more free time would be amazing. I was wrong.  A certain amount of stress can be a really good thing.

Humans are also living longer these days. Plan for longevity, not retirement. This is especially important when you consider inflation. It may eat away at what money you have put aside and incrementally decrease your buying power.

If nothing else scares you about this event, early retirement may be an early kiss of death according to many studies. Use it or lose it - people that remain active and engaged in life draw enormous benefit.

One of the best transitions might be to remain somewhat connected to the business by acting as a consultant. This can allow for some much needed brain activity and feeling of purpose while allowing the stress and time of ownership and management to be someone else’s problem, however, this could also backfire drastically. Some people have a hard time being so close to their former business. For example, you may be unable to identify with the potential changes to the business initiated by the new ownership. Also, you may be unable to handle taking orders after being the boss for so long. At the end of the day you might want to look at a gradual break from the business and then move into something else.

A second option could be to use the skills learned in business and pass these on to others or join a few charitable boards. It may be difficult to give the same weight to the work, have impact on the decisions, or be able to fill up enough hours in a day. Nevertheless, work is often more lasting and more rewarding as you may finally have a chance to see the larger picture and actually have some amount of impact on it.

Maybe even better than all is the concept of findependence (a concept originated by Mike Drak and Jonathan Chevreau). This concept has many aspects, of which inherent within this process is the idea of investing yourself in work because you want to and not because you have to. It means achieving a certain level of financial stability and then just working to pay for your lifestyle. This may mean not even selling the business, but bringing in a much larger management team to continue the business. This may mean a smaller bottom line, but it grants the longevity of income and still allows for some amount of financial lifestyle.

If you have questions about planning for your life within the business context, please contact Brendan Bernakevitch to discuss the best options for your situation.